“Pharmaceutical and life sciences companies are now collaborating with payers and providers to achieve better patient outcomes and bend the healthcare cost curve. Those that can effectively demonstrate value in non-traditional ways have an opportunity to gain market share in a very competitive market for prescription drugs,” said Douglas Strang, PwC US pharmaceutical and life sciences advisory co-leader. “Meeting new expectations of value in healthcare affects how drugs will be researched, marketed, manufactured and priced in the future, and first movers will have an advantage,” he adds.
Brand-name drugmakers are fighting for a shrinking share of premium real estate on prescription drug formularies, and a shift in consumer and prescriber drug preferences could hurt revenues for pharmaceutical and life sciences companies in the US which do not accelerate their efforts to provide value and build trust with other health organizations, the study warns.
The HRI says the following five major forces are dramatically altering pharmaceutical revenue models in the US:
– industry has made a big bet on biologics, most of which are aimed at smaller, more targeted patient populations and are significantly more expensive than previously-available drugs. Biologics are becoming a larger share of US Food and Drug Administration (FDA)-approved drugs and represent the majority of products in the drug pipeline, but the cost/benefit equation creates new dilemmas for purchasers;
– health plans and the federal government are moving away from unit-based payment that rewards drugmakers for volume and towards outcomes-based payment in which the value of a treatment tracks much more closely with its impact on patient health;
– health plans, hospitals and physicians are demanding more and better data to determine “real world” clinical and cost effectiveness beyond product launch. They are seeking ways to incorporate insight from new, multiple data sources such as electronic medical records, mobile health, medical devices, insurance claims data and even patient-reported feedback over the life of a drug;
– health plans and employers realise they are losing money on patients who do not take their medications properly. Prescription drugs account for only around 10% of total US medical spending, but the effects of drug non-adherence cost the system hundreds of billions of dollars each year; and
– technology and increased transparency of health information are empowering patients to be more involved in decisions about therapeutics. When patients take the helm of their health decisions, drugmakers’ discounts may carry less weight in formulary decisions, with quality and outcomes becoming the larger considerations.
A new definition of value is emerging, one that places patients and their desired outcomes at the centre of the universe, says PwC. The steps which companies are taking to create new value include focusing on developing the next innovative drug, independently, while others are collaborating with health plans, purchasers and others, and some are seeking data-sharing agreements to gain access to the clinical information needed to demonstrate and improve outcomes, it reports.